Mahindra bullish on e-commerce, plans retail expansion

Bullish on e-commerce potential in India, Mahindra group is set to expand in the segment with its specialty retail venture Mom & Me and also gearing up to adopt franchise model for the next stage of expansion. 

At present, the group operates 110 company-owned stores and is looking to go franchise route for further expansion of Mom & Me that focusses on maternity and infantcare products. 

On whether the group would be looking to invest in other e-commerce companies, Mahindra said at present the focus was on expanding the reach of Mom & Me. 

Petrochemicals prices up even as crude oil dips under $100

While international crude oil prices dropped below the $100 a barrel-mark this week, data released simulateneously showed prices in the $3 trillion global petrochemicals market rose for a second consecutive month.

As per Platts Global Petrochemical Index (PGPI), a top research and information source on the industry, global petrochemicals prices rose over 4 percent in July to $1,446 per metric tonne (mt) following a 2 percent monthly advance in June.

Prices declined in each of the four months prior to June. The PGPI is a benchmark basket of seven widely used petrochemicals published by Platts. On a year-on-year basis, the petrochemical prices were up 10 percent over July 2013.

While crude oil and naphtha prices were down 5 percent and 2 percent respectively in July, production issues for some products like olefins put upward pressure on prices.

"While prices of some products dropped in line with the lower input costs by late July, it didn't really show in the full monthly average," said Jim Foster, Platts editorial director of petrochemical analytics.

Petrochemicals are used to manufacture plastic, rubber, nylon and other consumer products and are utilized in manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.

Dalmia Bharat, OCL India in talks for a merger

As the cement sector picks up and is showing signs of good prospects going forward, Dalmia Group is looking at a merger of its listed cement companies Dalmia Bharat and OCL India, sources with direct knowledge share. A source also shared that the Dalmia family members are in talks for the merger and the swap ratio is expected to be in favour of the OCL India's shareholders. 

As part of the mega restructuring plan Dalmia Bharat will also merge its unlisted arm Dalmia Bharat Enterprises with itself. Global private equity firm KKR owns 14.5% stake in Dalmia Bharat Enterprises will eventually own a minority stake in the merged listed entity, a source said. 

Dalmia Bharat and OCL India have revived plans of the merger after a failed attempt way back in 2008. Dalmia Bharat owns 48% stake in OCL India and both companies together have a cement capacity of close to 20 million tonnes, Dalmia Bharat being the larger one. 

Joint force of Dalmia Group's cement companies will also inch closer to India's third largest cement producer, JP Associates, in terms of capacity. JPA has been selling its assets to reduce the group's debt pile. JP Associates's 4.8 mt unit was sold to Ultratech  in 2013 and Bhilai unit of 2.2 mt to Dalmia Bharat, Bokaro unit is also on the block. On the other hand, Dalmia Group is in the expansion mode and is expected to reach 24 mt of cement capacity by 2015-end. 

Indian Rupee’s Volatility Climbs After Mixed Signals From Fed

Volatility in India’s rupee rose from a two-week low after Federal Reserve Chair Janet Yellen refrained from giving a clear indication on when U.S. interest rates would be raised and as tension in Ukraine increased.

Slack remains in the U.S. labor market, though borrowing costs could be raised sooner than expected, Yellen said in Jackson Hole, Wyoming on Aug. 22. Ukraine announced an increase in military spending before preliminary peace talks with Russian President Vladimir Putin tomorrow as the conflict with pro-Russian rebels showed no signs of abating.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.1 percentage point, to 6.90 percent as of 10 a.m. in Mumbai. The measure touched 6.77 percent on Aug. 22, the lowest since Aug. 6. The rupee was little changed at 60.46 per dollar following three weeks of gains,

Efforts to cut the budget deficit are positive for India’s credit ranking, Agost Benard, Standard & Poor’s associate director of sovereign ratings inSingapore, said in an Aug. 22 interview. Finance Minister Arun Jaitley aims to reduce the shortfall to 4.1 percent of gross domestic product in the year through March 2015, which would be the least since 2008, according to estimates released last month.

Three-month offshore non-deliverable forwards fell 0.1 percent today to 61.33 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

India’s 10-Year Bonds Decline as Demand Seen Slowing Before GDP

India’s 10-year government bonds declined for a third day on speculation demand will weaken as investors await a report this week on gross domestic product.

The $1.9 trillion economy probably expanded 4.9 percent in the three months through June, after a 4.6 percent gain the previous quarter, according to DBS Bank Ltd. Standard & Poor’s Singapore-based Associate Director of Sovereign Ratings Agost Benard said in an Aug. 22 interview that the government’s efforts to cut the budget deficit are positive for the country’s credit profile.

The yield on the 8.4 percent bonds due July 2024 rose one basis point, or 0.01 percentage point, to 8.53 percent as of 10:13 a.m. in Mumbai, according to the central bank’s trading system. The rate has climbed five basis points from this month’s low of 8.48 percent on Aug. 20.

One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, advanced one basis point to 8.46 percent.

Gail plans Rs 10,000 crore pipeline to bring CNG to Varanasi

After a cleaner Ganga, residents of PM Narendra Modi's constituency Varanasi and 16 other eastern cities can also look forward to breathing cleaner air. The Narendra Modi government has pulled out from the cold storage a Rs 10,000 crore pipeline project that would make it possible to provide CNG and PNG services in these cities and revive sick fertilizer plants in the region. 

The new pipeline would help the government revive defunct fertilizer plants at Gorakhpur in UP, Barauni in Bihar, Sindri in Jharkhand and Durgapur in West Bengal by supplying gas, considered a cheaper feedstock than naphtha. In addition, the pipeline will also supply natural gas to refineries at Barauni and Haldia, steel industries, power plants and other large manufacturing units in the region. 

The blueprint of the pipeline was drawn and approved years ago during the UPA regime. But Gail was reluctant to start work as it did not find the project economically feasible in the absence of anchor consumers -- essentially big and medium industries. But with the Modi government making a commitment in Parliament to develop the eastern region, Gail now sees prospects improving for major consumers. 

The oil ministry under Dharmendra Pradhan had recently tweaked the domestic gas allotment policy to speed up CNG and PNG services in the country to reduce vehicular pollution and subsidy on diesel and kitchen fuels. Under the changed policy, CNG and PNG services would get domestic gas for all of their demand. Domestic gas costs three times less than imported liquid gas, providing cheaper fuels for consumers. 

Brent edges down near $102 as supply, dollar weigh

Brent crude dipped towards $102 a barrel on Monday as ample supply and a stronger US dollar continued to pressure oil markets. 

Geopolitical tensions in Ukraine and Libya underpinned prices, but did little to push them higher in the absence of any supply disruptions. 

Brent crude, which has fallen for the past two weeks, extended losses to fall 11 cents to $102.18 a barrel by 0442 GMT. 

US crude for October delivery was at $93.54 a barrel, down 11 cents after technical issues delayed a scheduled start on CME's Globex platform. Last week, US oil posted its fifth straight weekly loss. 

Weak demand and healthy oil production across the globe have helped created a supply glut in the Atlantic Basin, pushing Brent into its longest contango since early 2011, Morgan Stanley analysts said in a note. 

In a contango market, the prompt oil price is lower than those in future months, reflecting weak spot demand. 

Ranbaxy hits 52-week high on UBS upgrade

Shares of Ranbaxy Laboratories  gained momentum for fourth consecutive session to hit 52-week high after UBS raised its target price. 

According to the brokerage, the stock is a cheaper way to buy Sun Pharmaceuticals. It will benefit from strong outlook of Sun Pharma. 

It has raised target price to Rs 784 from Rs 600 earlier. 

Sun Pharma  recently announced acquisition of Ranbaxy for $4 billion. The former's shareholders have approved merger and approved the share swap-ratio as well. 

Maruti hits record high, Credit Suisse ups target by 16%

Credit Suisse maintains outperform rating on the stock with an increased target price to Rs 3,500 apiece (from Rs 3,020 earlier).

Shares of  Maruti Suzuki India  touched an all-time high of Rs 2,799 on the Bombay Stock Exchange, up as much as 1.6 percent in early trade Monday on hopes of gaining market share and expansion of operating profit margins. Credit Suisse maintains outperform rating on the stock with an increased target price to Rs 3,500 apiece (from Rs 3,020 earlier). The brokerage says Maruti remains top pick in the Indian autos space, and is both an Asia ex-Japan and Global focus list stock. "We raise FY16 earnings per share estimate by around 3 percent and introduce FY17 estimates, which are 15 percent higher than the street's," it adds. Credit Suisse expects the industry to witness a 12 percent compounded annual growth rate (CAGR) and Maruti to grow faster on a 5 percent market share gain in the next three years. The domestic market share of the company has risen to 44 percent in June quarter compared to 40.4 percent in the year-ago period with the sales in urban markets increasing by 12.4 percent and rural market sales rising by 26 percent in Q1FY15. Car ownership costs have remained flat for two years on account of stable gasoline prices and flat EMIs (high discounts and duty cuts) should help a volume recovery, says Credit Suisse.